BUY WITH ETIQUETTE
BETTER SERVICES FOR BUYERS
The real estate market offers many choices. Home buyers need good information to make good decisions. My guarantee to you is to make your home purchase as smooth as possible. Feeling good about the community you live can be as important as selecting the right home. As a local expert I can find a neighborhood that suits your needs from local restaurants and activities to school information and market trends.
Whether you’re a first-time home buyer, a step toward downsizing or a seasoned real estate investor, choosing a home is highly personal. Aside from matching the home’s features to your motivations, there are a few more key considerations that should play into every home buying decision. However, there’s also a lot to consider when you decide to buy. So before you begin your search for the perfect property, here are three questions you should ask yourself.
WHAT DO I WANT?
Take the time to figure out what type of property you want to buy. From single-family and multi-family homes to condos and co-ops, there are many different options on the market and it’s important to choose the type that best fits your needs. Figuring out the town or neighborhood you want to live in is equally important. While a property might have all of the amenities you’re looking for, factors like crime rate and proximity to highways can impact the overall home-owning experience. A good idea is to list out and prioritize your needs (e.g. large backyard, great school system) before you begin your search.
WHAT CAN I AFFORD?
The rule of thumb is that you should never spend more than 30% of your monthly income on a mortgage payment. An alternate rule states that you can afford to buy a property that runs about two-and-a-half times your annual salary. Keep in mind that the loan amount you will be eligible to borrow will be contingent on your credit history, debt-to-income ratio and other qualifications specified by your lender. Use a mortgage calculator to estimate your monthly payment.
AM I FINANCIALLY PREPARED?
A few months before you start searching for a home, review your credit history and make sure it is in good standing. Get copies of your credit report, ensure that it’s accurate, and fix any issues you discover. It’s likely that you’ll also want to get pre-approved for a home loan, which will put you in a better position to make a serious offer once you find the right property. Pre-approval from a lender is based on your credit history, debt, and income.
When you decide to purchase a home there is more to consider than just the purchase price or your monthly mortgage payments.
Here are some one time fees you can expect to pay as you close on your home.
Down Payment: A down payment is the amount you contribute toward a home’s purchase price. Depending on the lender or loan type, you may need to make a down payment equal to 0-20% of a home’s sale price.
Appraiser Fees: An appraiser charges a fee to determine the value of a home based on several factors: sales of similar properties in the area, market trends and house amenities (including square footage), defects and structural damage. Lenders will not approve a loan for more than a house’s appraised worth. Average cost: $300 to $500.
Home Inspection Fee: A home inspector charges a fee to check a home’s structure for defects and inspects items such as electrical wiring, plumbing and heating and cooling systems. If the inspector detects problems, you should work with me to determine ow to best handle the situation. For example you may have the opportunity to negotiate a lower home purchase price, or you can ask the seller to fix the problem prior to purchase.
Average cost $400.
Closing Costs: Closing costs include a number of their own fees, and according to the Federal Reserve, they usually add up to approximately 3% of the home’s purchase price. Closing costs may include but are not limited to.
Loan Origination Fee: covers a lender’s administrative costs: also called origination points. Average cost: 1% of loan amount.
Survey Fee: covers the cost of determining the property’s boundaries. Average cost: up to $400.
Title Insurance and Recording Charges: charged by state and local governments to record your deed, mortgage and loan documents. Average cost: up to $400.
Discount Points: an optional cost that allows borrowers to purchase points to lower a loan’s interest rate. Each discount point generally costs 1% of the total loan amount. Depending on the agreement between lender and borrower, 1 point can lower the interest rate by 0.25%-1.25%.
Credit Report: covers the cost for a lender to pull a considered credit report to evaluate your creditworthiness. Average cost: $10 to $20 per borrower.
Earnest Money Deposit: The earnest money deposit is a “good-faith” payment you submit with your offer on a home to show the seller you are serious about proceeding. The earnest money is deposited in an escrow account and will be applied to your closing costs. Sometimes, your lender will want you to bring a receipt for the earnest money deposit along with your sales contract to the initial loan application meeting. The amount of the earnest money deposit varies by state, but is typically in the range of 1-2% of the purchase price.
SELL WITH ETIQUETTE
A BETTER WAY
Whether you’re ready to move into a bigger house for your growing family, downsize to a smaller place or relocate to a different part of the country for work, the process of selling a house is one that requires work – maybe more work than you anticipated.
There are four Factors Influencing the Sale of Your Home: Location, market conditions, list price, and market position. I will use innovation, reach, tenacity, creativity, and expertise when listing your home on the market. I will take a strategic approach to positioning your home on the market for the most effective results.
Understanding the financial aspects of selling your home is one of your major priorities as you will want to understand how much will be wired into your bank account after all is said and done! An overview is listed below.
THE COST OF SELLING A HOME
From start to end, you will need to spend money to successfully sell your home. Whether it’s the cost to rent furniture for staging, steam clean the carpet, replace broken cabinet doors or pay the brokers’ commission, you’ll need to be financially prepared to pay up throughout the listing period and transaction.
HERE ARE SOME COSTS YOU MAY BE EXPECTED TO COVER
LEADING UP TO THE SELL OF YOUR HOME:
If you’re thinking about selling your home, it’s likely there are things you could do to enhance the appeal of your place and potentially raise its value. If you’ve been putting off sprucing up the exterior of your property, painting the inside, or repairing a staircase or a leaky faucet, now is the time to make those changes. Getting the home ready to be sold can require minor cosmetic work, like painting and decluttering, or major upgrades sometimes a new kitchen and bathroom can raise the value a significant amount. Also, if the buyer’s home inspector finds problems, such as a damaged roof or bad plumbing, you might have to pay to fix those issues in order to close the deal. Big repairs can set you back financially, so be prepared for them before you decide to sell, especially if you expect problems will be revealed during a home inspection.
PRE-SALE HOME INSPECTION
This is strictly optional and it could cost around $400 or more. So why would you pay for one? Some sellers make the investment because they want to find out about any structural or mechanical problems with the house before a potential buyer comes in with his or her home inspector. Getting a pre-sale inspection allows you to make major repairs ahead of time, removing any possibility of a buyer demanding them later or asking you to lower the price. I will discuss with you whether a pre-sale home inspection is recommended. Keep in mind that if your inspection reveals material defects with your home, you’ll have a responsibility to disclose them to a buyer, depending on your state’s laws for disclosure requirements.
Twenty-eight percent of seller’s agents said they staged all homes before listing, spending a median amount of $400, according to a 2019 NAR report.
Buyers like to envision what a house could look like after they move in. If you’re a seller, it’s worthwhile to spring for cosmetic repairs, like fresh, neutral paint and new flooring. Improving curb appeal with fresh plants or flowers can really appeal to buyers without costing too much. The cost of a professional stager varies according to the size of the home, the extent of the work, the length of time the house is on the market and other factors. Expect to spend several hundred dollars, at minimum, and possibly thousands if you need a professional stager.
If you plan to move out before you sell your home, you’ll want to continue to pay for water and electricity. A home without air conditioning/heat and lighting can be difficult to show to buyers. Your current bills will give you an idea how much it will cost each month to leave on the utilities until a new buyer moves in.
The proceeds of your home sale will be used to pay off your mortgage, but it’s likely that the payoff amount on your mortgage statement is a little less than what you actually owe. You’ll likely have to add prorated interest you’ve accrued to the total balance. Additionally, you might have to pay a fee if there’s a prepayment penalty associated with your mortgage. Check your loan documents or contact your current lender to find out if your loan includes this condition.
Commission for both listing and buyer agents – typically 6 percent of the sale price.
CLOSING COSTS AND ADDITIONAL FEES
While the closing costs to sell a house are typically the responsibility of the buyer, don’t be surprised if you are asked to foot the bill, especially if you are trying to sell your home in a buyer’s market (one which has a lot of homes for sale). Some of these costs may include homeowner’s association fees, property taxes, transfer taxes and title insurance. You also may be asked to pay an escrow fee, a brokerage fee and a courier fee. Altogether, closing costs can range from 2 to 4 percent of the home’s sales price. Although many of these costs are negotiable, it helps to be prepared.
CAPITAL GAINS TAX
Don’t forget to consider taxes. When you sell a home for more than you paid for it, that counts as a capital gain and might need to be reported on your federal tax return. The good news is, many homeowners are eligible to exclude up to $250,000 of profit ($500,000 for married couples filing jointly) of their main home from tax, as long as they haven’t used the tax break on another home sale within the past two years. The tax break applies if it was your primary home for at least two out of the previous five years.
Sellers also need to remember property taxes, which are dependent on if they are escrowing into their mortgage. Property taxes are usually paid in advance. The seller should pay the prorated share of property tax up to the closing date, with the money placed in escrow. However, if you’re selling your home and have already paid taxes for the year, you may actually get a rebate at closing. The buyer will reimburse the seller for the portion of taxes already paid that apply after the closing date.
Are You Thinking About Buying a Home Soon?
It’s difficult to know when to buy a new home or to transition from renting to home ownership, but you don’t need to go through the process alone. You may be wondering what the housing market is doing, about interest rates, steps to home ownership, or even if it better to continue renting.
Simply fill out my form to receive your copy of my free home process booklet, and feel free to reach out to me with any questions you may have. I am here to guide you through this process.